MOGADISHU, April 25 (Reuters) - Somalia's acting central bank governor Bashir Issa Ali has been confirmed in the role, the country's prime minister said on Friday, tasking Ali with turning around an institution at the heart of graft allegations against the government.

Western donors who are funding Somalia's recovery after 23 years of conflict, including a seven-year Islamist insurgency, say fixing the bank is a core condition for receiving aid.

Two governors had left their posts in quick succession last year amid graft claims.

The first governor was accused by U.N. investigators of corruption, which he denied. The second quit and fled Somalia, telling diplomats that top government officials had put pressure on her to sign shady deals.

"The Central Bank is essential to managing government revenue in a transparent manner, and I expect the government's plan to create trustworthy and effective economic institutions will boost Somalia's efforts to regain its status," Somali Prime Minister Abdiweli Sheikh Ahmed said in a statement.

Maryam Abdullahi Yusuf has been appointed Ali's deputy.

Ali, a veteran banker who held a top job in Somalia's commercial banking sector before the 1991 civil war and was central bank governor under an earlier transitional government, was asked to take up the post on an interim basis in November.

Widely seen as a safe pair of hands, Ali's appointment came at a low point in relations between Somalia's president and Western donors concerned about graft within his inner circle. (Writing by Drazen Jorgic; Editing by Louise Ireland)